Financial Data and Key Metrics Changes - Total revenue for the first quarter was $7.6 million, up 5.8% year-over-year [14] - Advertising revenue increased by 6% for the quarter, driven by strong growth in the Zedge marketplace [15] - GAAP income from operations was $0.9 million, compared to a loss of $0.5 million last year [17] - Non-GAAP net income was $0.9 million, with EPS of $0.07, compared to break-even last year [17] - Free cash flow was negatively impacted by approximately $350,000 due to tax withholding payments related to restructuring [18] Business Line Data and Key Metrics Changes - Zedge marketplace revenue increased significantly, supported by strong advertising CPMs and subscription revenues [14][15] - Zedge Plus subscription revenue rose by 29% year-over-year, with net active subscribers growing by 54% to nearly 1.1 million [15] - Deferred revenue reached $5.7 million, up 7% sequentially and 55% year-over-year, indicating future revenue potential [16] - Cost of revenue increased to 7.3% from 6.4% last year due to reduced partner discounts and new licensing fees [17] Market Data and Key Metrics Changes - The company is seeing a growing interest in its Data Seeds offering, with a robust pipeline of prospective customers [5][7] - The market for rights-cleared and high-quality datasets is expanding, as evidenced by significant licensing agreements in the industry [8] Company Strategy and Development Direction - The company aims to build products that resonate with users, scale successful ones, and allocate capital to enhance long-term shareholder value [12] - The focus remains on innovation, with plans to introduce additional alpha products throughout fiscal 2026 [10] - The company is committed to a disciplined approach to capital allocation, including share repurchases and dividends [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's leaner cost structure and efficient operating model entering fiscal 2026 [11] - The company anticipates strong cash generation for the remainder of fiscal 2026, despite temporary pressures this quarter [11] - Management is optimistic about the growth potential in both consumer and enterprise markets [12] Other Important Information - The company repurchased 240,000 Class B shares during the quarter and paid its first quarterly dividend [12] - The restructuring actions taken earlier this year are expected to yield ongoing savings and operational efficiencies [11] Q&A Session Summary Question: How is Data Seeds recognized as revenue? - Revenue from Data Seeds is recognized when the product is delivered and accepted, currently grouped under digital goods and services [20][21] Question: What is the typical sales process for Data Seeds? - The sales process involves operational steps beyond content production, including contract negotiations, and clarity on timelines is expected in the coming quarters [24][25] Question: What is the current operating status of GuruShots? - GuruShots is currently incurring losses, with operating losses partially attributed to Data Seeds, and is stabilizing at around $150,000 per month [29][30] Question: What is the outlook for Emojipedia? - Management is monitoring the impact of AI Overviews on Emojipedia and hopes to stabilize its performance in the coming quarters [31] Question: What was the impact of restructuring costs on free cash flow? - Restructuring costs included approximately $330,000 in tax withholding payments, which impacted free cash flow during Q1 2026 [36] Question: How much is left in the share buyback program? - There is approximately $600,000 remaining under the current buyback authorization [37]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $7.6 million, up 5.8% year-over-year [14] - Advertising revenue increased by 6% for the quarter, driven by strong growth in the Zedge marketplace [14] - GAAP net income was $0.8 million, compared to a loss of $0.3 million last year, with EPS of $0.06 [17] - Free cash flow was negatively impacted by approximately $350,000 due to restructuring-related tax payments [18] Business Line Data and Key Metrics Changes - Zedge marketplace revenue increased significantly, supported by strong advertising CPMs and subscription revenues [14] - Zedge Plus subscription revenue rose by 29% year-over-year, with net active subscribers growing 54% to nearly 1.1 million [15] - Deferred revenue reached $5.7 million, up 7% sequentially and 55% year-over-year, indicating future revenue potential [16] Market Data and Key Metrics Changes - The core business remains healthy and resilient, with a strong subscription engine scaling effectively [12] - The Data Seeds initiative is gaining traction, with a robust pipeline of prospective customers [6][12] Company Strategy and Development Direction - The company is focused on building products that customers love, scaling successful ones, and allocating capital to enhance long-term shareholder value [12] - The strategy includes a disciplined approach to capital allocation, with share repurchases and dividends reflecting confidence in long-term value creation [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory for fiscal 2026, emphasizing innovation and expanding operating leverage [12] - The company is monitoring the impact of AI developments on its products, particularly regarding Emojipedia [31] Other Important Information - The company has a leaner cost structure and a more efficient operating model entering fiscal 2026 [11] - The Data Seeds Production Cloud is a key asset that allows for the delivery of high-quality datasets for AI training [8] Q&A Session Summary Question: How is Data Seeds recognized as revenue? - Revenue from Data Seeds is recognized when the product is delivered and accepted, currently grouped under digital goods and services [21] Question: What is the typical sales process for Data Seeds? - The sales process involves operational steps beyond production, including contract negotiations, and clarity on timelines will develop over the next few quarters [25] Question: What is the operating status of GuruShots? - GuruShots is currently incurring losses, with stabilization around $150,000 per month, and efforts are underway to evolve it towards break-even [29] Question: What is the outlook for Emojipedia? - The future of Emojipedia is uncertain, with management needing more time to assess the impact of AI developments on its performance [31] Question: What was the impact of restructuring costs on free cash flow? - Restructuring costs included approximately $330,000 in tax withholding payments, which impacted free cash flow for the quarter [35] Question: How much is left in the share buyback program? - There is approximately $600,000 remaining under the current buyback authorization [37]